Mr Kotak, who heads Kotak Mahindra Bank, also said Indian equity market should give a return of 15-20 per cent this year from the current levels and this growth should also help investors look away from gold towards equity as an investment option.
"(The) time has come for Indian savings into Indian equity and we will have to take whatever policy measure we can to achieve this goal of getting Indian savers to the Indian equities," Mr Kotak said on the sidelines of World Economic Forum (WEF).
A regular visitor to the WEF meeting at this Swiss Alpine town, Mr Kotak had said last year at Davos itself that urgent steps were needed to curb gold demand, especially because of the impact of its enormous imports to meet the demand in the country.
Talking about the government's recent steps with regard to curbing of gold imports, he said: "There are two ways to handle efforts to slow down the gold imports and Indians putting money in gold. One, steps like duty and second, to make some other asset class more attractive.
"The asset class they must make more attractive to reduce gold demand is equity. If shares become more attractive to Indian savers, then gold demand will go down."
Giving an interesting analogy, Mr Kotak said that the huge demand for gold and the consequent surge in its import was actually leading to Indian money getting exported to foreign countries for purchase of gold from there.
"Today what we are witnessing is that the foreign savers are putting money into equity here or you can say we are importing foreign savings into our equity. At the same time we are exporting Indian savings into foreign gold," he added.
Mr Kotak said that all other steps including imposition of higher duty can continue but it is very important to give an attractive alternative to Indian savers to drive them away from idle asset like gold. "If you are buying gold today and instead of gold you want to buy some other asset class that is more attractive that could be only equity," he added.
When asked about stock market movement going forward, he said the market should give a 15-20 per cent return this year from the current levels. The Indian government on January 21 hiked the import duty on gold and on platinum to 6 per cent from 4 per cent with immediate effect - a move aimed at curbing imports of the precious metals to check the widening current account deficit (CAD).
The government also decided to link gold Exchange Traded Fund (ETF) with gold deposit scheme, which will enable mutual funds to unlock their physical gold and invest in gold- linked schemes offered by banks.
The move to link gold ETF with deposit schemes will help increase physical availability of gold in the market, as a part of the gold lying in stock will be brought into circulation meeting the demand of gems and jewellery trade.
Market regulator Sebi and the Reserve Bank are likely to come out with notifications on Gold ETF and gold deposit schemes in two to three weeks. Gold imports in 2011-12 amounted to $56.5 billion and in the current financial year, till December, they are estimated at $38 billion (Rs 2,03,894 crore).
Traditionally, India has been the world's largest consumer and importer of gold. Outflow of the foreign exchange on gold imports is impacting country's CAD, which has widened to $38.7 billion or 4.6 per cent of the GDP in the first half of the current fiscal year.